I’ll try to answer some of your questions, but first IMHO YOU should be playing the guitar parts and not some software package. Trying to emulate all of a guitarist’s nuances into midi is almost impossible. Although I’ve heard some very convincing midi guitar parts the time it takes to create them is extremely long compared to the time it takes for a guitarist it just play them. Plus you have the chops!
Soundfonts (SF2) are samples made for either a Creative Lab sound card or a soundfont player. SFZ is a free SF2 player you can download and there are a ton of free SF2s out there also. Some of these free ones are very good. Just remember that SF2’s are at the lower end of the sample scale. That is there are very few samples to each sound when compared to higher end and more costly players such as Kontakt and Sonivox thus, although I mentioned some a very good, they may not be as realistic sounding as you want.
SFZ, real guitar and Sonivox are VSTi’s. These are plugins that you can use with Realband. You will need a midi controller (keyboard, guitar etc) or you can input individual notes via the piano roll. The VST is the sound source, i.e. whatever sound you pick is what you will hear.
To process a raw guitar sound I render the midi file to a wav file then run the wav file through an amp modeler (there are some free ones out there) and/or some effects. This can help add some realism to a guitar part. Note that this is how I add effects to my real guitar playing many times. Record the guitar then play with the effects in my sequencer. Also note that there are many really good free effects out there. This
site will have most of what you want.
IMHO I would record my own guitar parts. Purchasing an amp modeler such as V-Amp, Line 6 POD or a small Vox modeling amp may be another option.
Also remember that google is our friend. You can find the pros and cons on everything there.
I hope this helps.